Ezra Klein: Things You Won't Learn From Industry Propaganda

June 29, 2007

Things You Won't Learn From Industry Propaganda

I'm not entirely sure there are words to describe how bizarre it is to watch Andrew Sullivan rely entirely on research from the pharmaceutical industry's web site to make his case for why drug companies should get to charge anything they want. I mean, really, we're going to need a new term. Gullimarkable?

In any case, Sullivan's case is a mess even if you excuse his sources. He gets really excited about a 1994 European Commission report saying "Europe as a whole is lagging behind in its ability to generate, organise, and sustain innovation processes that are increasingly expensive and organisationally complex." The quote from the report then ends, and we have to rely on Pharma's interpretation of how it relates to drug research on the continent.

If Sullivan weren't just parachuting into the issue with a copy of Free to Choose and a tone of extreme indignation, he'd know that a similar study was released last year showing problems in the American pharmaceutical market -- notably, a precipitous drop in new drug development from the pharmaceutical industry.

A report by the General Accounting Office concludes that current patent law discourages drug companies from developing new drugs by allowing them to make excessive profits through minor changes to existing pharmaceuticals. While pharmaceutical research and development expenses have increased by 147% since 1993, applications for approval of "new molecular entity" (NME) drugs, or drugs which differ significantly from others already on the market, have risen only 7%. According to the report, the majority of newly developed medicines are so-called "me-too" drugs, which are substantially similar to existing drugs, are less risky than NMEs drugs to develop, and which "offer little in the way of therapeutic breakthroughs."

Entirely 68 percent -- two-thirds -- of the industry's new drug applications are for knock-off, me-too drugs. The incentives for copying tried-and-true products are far, far too high. So it turns out profit -- generated here by patents -- can actually harm drug development! Am I blowing your mind yet?

Here's a bit more: Those molecular advances Sullivan thinks come entirely from the magic of private enterprise? They're socialism in action. One survey found that taxpayer-funded research developed 15 of the 21 most important drugs introduced between 1965 and 1992. And these aren't joke pharmaceuticals:

A study of the 21 drugs introduced between 1965 and 1992 that were considered by experts to have had the highest therapeutic impact on society found that public funding of research was instrumental in the development of 15 of the 21 drugs (71 percent). Three-captopril (Capoten), fluoxetine (Prozac), and acyclovir (Zovirax)-had more than $1 billion in sales in 1994 and 1995. In addition to these drugs, other members of the group of 21 drugs, including AZT, acyclovir, fluconazole (Diflucan), foscarnet (Foscavir), and ketoconazole (Nizoral), had NIH funding and research to help in clinical trials.

Another study, this one from 1990, looked at 32 drugs on the market and concluded 60 percent would've never been developed without public funds. Yet another "traced more than 45,000 references from U.S. patents to the underlying research papers, and tabulated both the institutional and financial origins of the cited science. We found that more than 70 percent of the scientific papers cited on the front pages of U.S. Industry patents came from public science -- science performed at universities, government labs, and other public agencies."

Pharmaceutical companies don't develop all their drugs. They spend a lot of time buying, patenting, and bringing to market advances made in the public sector through NIH grants and university research. If you're curious as to how this works, take a look at the cancer drug Taxol. Discovered by the NIH and licensed to Bristol-Meyers-Squibb, Taxol is sold for $20,000, costs $1,000 to produce, and the NIH gets .5 percent of the royalties. The pharmaceutical industry was damn innovative, to be sure, but not in the development of this drug -- only in the selling of it.

But you won't find that on the pharmaceutical industry's web site.

June 29, 2007 in Health and Medicine | Permalink

Comments

Ezra your link to the study is borked. Someone let the domain registration slip and it is in the hands of squatters.

Posted by: zAmboni | Jun 29, 2007 4:16:22 PM

I think this is the same study you were talking about:
http://hsc.utoledo.edu/research/nih_research_benefits.pdf

Posted by: zAmboni | Jun 29, 2007 4:17:54 PM

So what you're saying, then, is that the reason there is more pharmaceutical research going on in the USA - if that is indeed the case - is because America has a more socialized system for pharmaceutical research and development than Europe.

Also, did Three-captopril (Capoten), fluoxetine (Prozac), and acyclovir (Zovirax) have over $1 billion in sales worldwide or just in the US? Pharmaceutical companies do sell drugs outside America, and I don't buy for a second the idea that without outrageous prices in the US they'd all go bankrupt.

Posted by: Stephen | Jun 29, 2007 4:22:53 PM

research decreased because american drug co's rely on blockbuster drugs and marketing as their approach. this can be found in every other business article on profitability in the industry. well thats if you wanted to know.

Posted by: akaison | Jun 29, 2007 4:53:55 PM

Gullimarkable?

Sullible.

Posted by: Uncle Kvetch | Jun 29, 2007 4:55:54 PM

Sullivan is such a stooge for the pharmaceutical companies because he says they saved his life. Surely, without HIV medicine he'd be a corpse now.

Which is fine. I would do the same in his position. But I wouldn't talk about it like he has. It doesn't mean he is impartial or learned on the subject. Indeed, these companies love the fact they have this guy touting around his credibility in their service.

Posted by: Joshua | Jun 29, 2007 4:57:43 PM

But even that doesnt make much sense. many of the inhibitors etc he maybe on are a product of both basic research by the govt and the private sector

Posted by: akaison | Jun 29, 2007 5:03:01 PM

I don't understand the lead off statement about pharms not being able to charge whatever they want. They're perfectly free to charge any price they'd like. And the national health services are perfectly free to not buy products from them if they don't like the price.

Why is it that when buyers don't like a deal it's an assault on the free market?

Posted by: MIkeJ | Jun 29, 2007 5:05:42 PM

because of idealogy- see- since it's the government acting as consumer they aren't suppose to want the best price because they are so large that they can affect the market. it's bizzare logic when you realize they also seem to often argue that sellers can have similar unequal bargaining positions

Posted by: akaison | Jun 29, 2007 5:19:08 PM

It's not a free market if patent protections allow them to rig it, is it MikeJ?

Posted by: spike | Jun 29, 2007 5:19:55 PM

okay now that last post was beyond bizzare logic

Posted by: akaison | Jun 29, 2007 5:31:19 PM

...
IP law screwing up our corporate healthcare system?

Throw in a gay-rights issue, and a reason to conclude that Bush must be impeached and you will have honed the ultimate channel for my liberal indignation!

Posted by: Anthony Damiani | Jun 29, 2007 5:52:27 PM

Ezra writes:

Er, no. First, the report was published in late 2000, not 1994. You and Sullivan seem to be confusing the report with a 1994 "European Commission Communication" referred to in the previous paragraph.

And second, you don't have to rely on "Pharma's interpretation." You can follow the link to the report itself and read the authors' findings in their own words. And those words really are quite damning of the European pharmaceutical industry and European pharmaceutical regulation, repeatedly comparing them unfavorably to those of the U.S. and Japan. The European drug industry, according to the report, is characterized by a lack of innovation, insufficient R&D, and insufficient market-based competition.

Perhaps there is a good case for reform of U.S. patent law regarding pharmaceutical drugs (and I do mean "perhaps"). But whatever the deficiencies of the U.S. industry, the European one seems considerably worse.

Posted by: JasonR | Jun 29, 2007 5:57:14 PM

Michael Moore's controversial film SiCKO opens nationwide this weekend. But before the inevitable discussions about the accuracy of the film's portrayal of the U.S. health care system, you can make up your own mind. The summary below includes comparisons of the American health care system relative to other countries and between the states, data on the uninsured, rising health care costs, the woes of Medicare and Medicaid and more.

For all the details, see:
"SiCKO Required Reading: U.S. Health Care by the Numbers."

Posted by: Furious | Jun 29, 2007 6:02:24 PM

Here's my take on a Sullivan's post:
Andrew Sullivan identifies a whole bunch of problems that are supposedly caused by “socialized medicine” in the context of arguing against a universal health insurance system in the US. However, when you look at his list, it's almost all supply side—while universal health insurance presumably primarily affects the demand for pharmaceuticals. Given that transportation costs are low, the country that you develop a drug in should be mostly unrelated to demand in that country (I could imagine that it's slightly easier to get a drug approved by the FDA if it is developed entirely in the US, but the FDA approval process is probably quite distinct from the R&D side).

Why does it matter where the pharmaceutical companies are located? If European companies are being over-regulated such that they are moving their operations to the US, this is probably due to things like better employment laws or a better university research system in the US.

So universal health insurance won’t affect the supply side of the market and there’s no reason it would cause many companies to leave the US to run their operations elsewhere (unless they are being churlish about somewhat lower US drug prices).

Posted by: Joel | Jun 29, 2007 6:24:26 PM

Why does it matter where the pharmaceutical companies are located?

Here's the answer for this question, which is an important one.

Developing a drug properly (versus the basic research that NIH or universities do-- Ezra you do need to understand the different at some point)involves an intimate understanding of patient needs. Specifically, what do physicians believes are existing gaps in treatments for a given disease, what are the corresponding patient needs, what data is most helpful to physicians in determining whether a new drug is useful, etc. You need people on the ground in a given country, who can converse with local physicians and patient groups and develop this understanding. Accordingly, a drug will be developed based on the company's understanding of the market needs and clinical trials are designed accordingly.

The importance of the geographic market value is that it directly bears on the focus of which country's you spend time to understand these physician and patient needs. The US market, as Sullivan correctly notes, is estimated to be around 50% of a drug's total global value. The other remaining 50% will be spread among 20+ countries in the EU, along with South America, Japan and maybe a few others. With this type of split, it clearly makes most sense to invest most heavily in an R&D organization located in the U.S. in order to develop that local physician/patient knowledge.

The result is not surprising: non-US pharma companies have heavily moved their operations to the US over the past 10-20 years, and more recently to MULTIPLE sites in the US (i.e. New Jersey, Boston, RTP, West Coast). Similarly, the flow of venture capital dollars, which are necessary to help translate the early basic research from academic labs into young biotech opportunities, have increasingly become more US-based. Venture capitalists understand the importance of local physician/patient knowledge: even biotechs that are based on European university science and initially founded in Europe are increasingly being forced to open US affiliates or move operations to the US as contigency for funding.

Posted by: wisewon | Jun 29, 2007 6:47:28 PM

Furious,

Well done. I'm sure writing that mess must have taken you a long time. What a shame it's such a shallow, uninformed and misleading analysis. For example, right at the start you cite the infamous WHO World Health Report 2000. Are you aware that the report has been strongly criticized in the academic public health community for its flawed methodology and unjustified conclusions? (See this paper, for example). In particular, the study's reliance on a single aggregate health indicator (disability adjusted life expectancy) to measure health care system effectiveness is completely without foundation in public health research.

You next cite a study published in JAMA that found that Britons tend to be healthier than Americans. You attribute those health differences to the alleged inferiority of the U.S. health care system. That claim directly contradicts the statements of the study's author, who explicitly denied that the health differences can be attributed to health care system differences, and suggested lifestyle differences are the likely cause.

Similar problems and confusions plague the rest of your post. But I'm sure you're just uncritically regurgitating material you found elsewhere in the liberal blogosphere, rather than making a real effort to understand the issue of health care policy in any serious way.

Posted by: JasonR | Jun 29, 2007 6:51:35 PM

all these theories would make sense if they had anything to do with what the business of selling drugs int eh us is about- which certainly isn't research. again, read the wall street journal or any other business magazine. better yet spend about a year working at oen of these places, and tell me- if blockbuster drugs with multiple, not necessarily vital, applications is the core focus.

Posted by: akaison | Jun 29, 2007 6:57:02 PM

Let me educate you guys on how pharma research works in the USA.

1) Clinical problem is identified by medical doctors. E.g. we need a treatment for disease X.

2) NIH funds university-based researchers (MDs and PhDs) to study the basic science of disease X. This research has NOTHING to do with therapies, only the pathophysiology of the disease. Key steps in the pathophysiological disease cascade are identified.

3) NIH funds university-based research again to study the mechanics of proteins/genes involved at the key pathophysiological steps of the disease. One or more "candidate targets" for intervention are identified. E.g. enzyme Y is upregulated in disease X, leading to the clinical phenotype.

4) This is where 95% of NIH/university research stops and where big pharma enters. The challenge now is to identify agents that can downregulate the activity of enzyme Y. Big pharma uses its considerable array of computing power (that most universities do not have access to) to suggest possible chemical moieties (or even amino acid sequences) that will change the shape of the upregulated enzyme Y into an inactive form.

5) Based on this "raw list" of chemical moieties, big pharma undergoes an exhaustive "candidate molecule" search. The goal of this is to find naturally existing or previously synthesized compounds which come close to recreating the desired molecular activity.

6) Once a candidate molecule is identified, an organic pathway for synthesis must be designed.

7) Once an organic synthesis pathway is defined, preliminary in-vitro trials can begin. Cell lines exhibiting the disease X process are grown in culture and exposed to the candidate molecule. Molecular genetics techniques are used to detect if the activity on enzyme Y is this cell line is reduced.

8) If in-vitro activity is established, the next step is in-vitro toxicity. If the candidate molecule causes premature death of hte cells, research is halted or re-started from an earlier branch point.

9) If the drug passes the in-vitro toxicity screen, the next step is small animal trials for toxicity. inject the drug into rats and see if they croak

10) If the drug passes the in-vivo toxicity screen, they run an in-vivo efficacy screen. Mice w/ the disease process are generated and exposed to the drug to see if their disease process is altered.

11) If the in-vivo efficacy screen passes, the company can apply for FDA approval of phase I, II, III clincal trials.

The idea that NIH/universities do most of the work and big pharma simply piggybacks off their ideas is bullshit. Yes, NIH/university role in basic science research is key and yes, big pharma bootstraps its efforts based on the publicly available research that the NIH puts out.

But that is in NO WAY equivalent to running the full gamut of the research pathway needed to produce a drug.

If we banned all private pharma industry and charged the NIH with all drug development, you'd be sorely disappointed because drug research would grind to a halt. You'd have to massively increase the NIH funding to accomplish this. I'm talking orders of magnitude higher.

Maybe we should do that, I think an all-NIH drug development process could be pretty cool. But lets not be fools--the current system of NIH research is NOT SUFFICIENT TO TAKE OVER FOR BIG PHARMA.

Posted by: joe blow | Jun 29, 2007 7:28:31 PM

Joe blow,

Nice post-- if people understood 50% of what you wrote, the dialogue would be much more informed. A few nuances for those interested:

--Industry does do #2 and 3 as well, but dollar expenditures in the US are probably 80% NIH/academic and 20% industry for these activities.

--Some entrepreneurial academic labs do #4 and the even more entrepreneurial ones form their own biotech companies at this point

-- #5 is optional, but will lead to better drugs in the long run (fewer side effects, more targeted treatments)

--#7-11 are required by FDA regulations-- its important to note that while many people rightfully point out the patent exclusivity as a divergence from free market principless-- it should also be noted that drug development is probably the most regulated and closely monitored business

Otherwise, to reiterate Joe blow's point, its completely wrong to think NIH could take on drug development in its current form.

Posted by: wisewon | Jun 29, 2007 7:43:33 PM

the current system of NIH research is NOT SUFFICIENT TO TAKE OVER FOR BIG PHARMA.

to reiterate Joe blow's point, its completely wrong to think NIH could take on drug development in its current form.

Gee, it must be really fun to oppose arguments that no one is making, considering how often these jokers do it.

But that's a fairly standard tactic: if you can't really engage the subject at hand, disprove something no one is talking about and claim victory.

Posted by: Stephen | Jun 29, 2007 8:19:56 PM

it must be really fun to oppose arguments that no one is making

Um, Stephen?

Read a little more carefully. From THIS post:

One survey found that taxpayer-funded research developed 15 of the 21 most important drugs introduced between 1965 and 1992.

Research isn't development-- that's the point.

Pharmaceutical companies don't develop all their drugs.

Pharma companies DO develop all of their drugs, i.e. steps 7-11 above. Its the early stage research, i.e. steps 2-4, that are done by others such as NIH.

The pharmaceutical industry was damn innovative, to be sure, but not in the development of this drug.

Same exact point. The initial research was done by NIH, i.e. steps 2-4 above, and then licensed to BMS for development.

FYI-- The "claim victory" sentence? Just so childish. I'm looking to engage in dialogue, share views-- you end your post with complete garbage.

You're wrong on the substance (Ezra IS confusing NIH and pharma activities) and a complete jerk in style.

Well done.

Posted by: wisewon | Jun 29, 2007 8:32:35 PM

wisewon- it makes sense that the country a company is located in is a country about which you have more information/contact with physicians. But it's not like drug companies are abandoning operations in Europe- they still sell drugs in Europe and given this they will presumably do all of the same things that they do in ensuring that their drugs are successful in the US. People have the same health problems in Europe as in the US and biochemistry is the same on both sides of the Atlantic.

There's probably some advantage for a drug company to have its headquarters at the most profitable market in the world- but Glaxo has headquarters in England and RTP and I have to suspect drug company operations are plenty divisible at the level of countries (after all, these are huge companies).

In any case, the US will presumably be the most profitable market even with some form of universal health insurance. As Kevin Drum pointed out, no one expects the government to be more ruthlessly devoted to cost-cutting than, say, Wal-Mart.

Posted by: Joel | Jun 29, 2007 8:47:13 PM

Joel--

They sells drugs in the the European countries, for sure. This requires Commercial operations, not R&D operations. They acutally have moved a fair amount of their R&D operations to the US, that was the focus of my post.

Europe is a very important market, 30-40% of total global value. But its extremely fragmented, meaning, that medical practice varies widely across countries, so the local patient/physician knowledge would be needed in many different countries.

Even big, BIG phama-- GSK, Pfizer, Merck, Novartis-- have less than 5 major R&D sites per country, with an average of around 3. Of those 3 sites are so, a number of them have moved from Europe to US. As I said at the top of this post, there are clearly operations in all countries, but the actual innovation happens in a select few places and increasingly those centers are in the US for the reasons mentioned in my earlier post.

Posted by: wisewon | Jun 29, 2007 9:00:34 PM

I agree with Stephen. No one that I know is suggesting the NIH, as currently comprised, take over for Pharma. And these points that there's a difference between bringing a drug to market and researching its basic molecular structure are obvious, too. Hence "Pharmaceutical companies don't develop all their drugs. They spend a lot of time buying, patenting, and bringing to market advances made in the public sector through NIH grants and university research." Yes, bringing to market involves science, and trials, and various other important, complex, and even worthwhile tasks.

But that's now what Andrew's talking about here, is it? "America is the last refuge for pharmaceutical innovation. And the left wants to kill that off." I don't think what he means is that government funded research labs are the last refuge for pharmaceutical innovation. And nor do any of you. If you want to have a more subtle discussion of pharmaceutical policy, we can, but that's not the point of this post. The point is that Sullivan really, really, really doesn't know what he's talking about. It's straight folly to attribute all drug development in this country to the Magic of Capitalism. And yes it's done, all the time, over and over again.

Posted by: Ezra | Jun 29, 2007 9:14:23 PM

Ezra,

I'm not going to defend Sullivan-- that wasn't my point.

My point is that there HAS been been shift in pharma R&D expenditures and biotech venture capital dollars from Europe to the U.S. This IS primarily due to the higher prices we pay for drugs, rather than government-dictated prices.

One other point-- if you do see this distinction between NIH and pharma activities, then you need to be more careful with your word choice. When speaking about pharmaceutical drugs, "develop" refers to a specific set of activities. The quotes of yours I cited above were inappropriate uses of the term "develop" in this context, hence my initial belief that you failed to see the distinction between NIH and pharma activities.

Posted by: wisewon | Jun 29, 2007 9:21:01 PM

Sullivan may have exaggerated, but the basic point that the U.S. is responsible for most of the innovation and major new drug R&D seems correct. The European pharmaceutical sector, in contrast, seems to have serious problems with innovation and development. The concern that imposing European-like regulatory restrictions on drug companies in the U.S. will stifle innovation and the development of important new products seems quite justified.

Posted by: JasonR | Jun 29, 2007 9:34:28 PM

And Ezra, commenters have talked in previous threads about nationalizing the pharma industry based on the "NIH is already doing the science, pharma just does the marketing" type of rationale... Joeblow's comment was directed at them...

Posted by: wisewon | Jun 29, 2007 9:36:13 PM

And those words really are quite damning of the European pharmaceutical industry and European pharmaceutical regulation, repeatedly comparing them unfavorably to those of the U.S. and Japan.

JasonR, I'm glad someone pointed out Japanese medical R&D, because Japan has price controls, doesn't it? In fact, the EC report spoke a lot more about European labor costs than price controls. You didn't mention price controls specifically in your post, so maybe you'd agree with me that this is a case of "Europe sucks" rather than "price controls suck", but in follow up posts Sullivan specifically (though not really coherently) refused that interpretation.

This is really about European faith in pharmaceuticals versus American faith in same, not price controls. Americans are excited about the benefits of drugs. If the government negotiated all prices, as it should, American voters would insist that sexy new drugs continue to be developed. The same way that American voters at times insisted that sexy new weapons systems be developed. Admittedly, if I was wrong about this and Americans started to have Phillip Longman-esque views about medicine I wouldn't be as upset about that as Sullivan and others might.

As far as NIH being able to take over, you can't just compare NIH/Uni R&D budgets to pharmaceutical corp budgets (not that pharma corp R&D budgets are public knowledge anyway)--you've got to throw all the money that various government insurances pay for patented medical products together (especially if we got national insurance), and then joe blow might get the orders of magnitude he's looking for.

Posted by: Consumatopia | Jun 29, 2007 9:42:24 PM

(not that pharma corp R&D budgets are public knowledge anyway)

Consumatopia,

These numbers are extremely public. Like all publicly-traded companies, they need to report their financial performance in detail on an annual basis, at a high-level on a quarterly basis. These numbers are heavily monitored by Wall St.

Posted by: wisewon | Jun 29, 2007 9:47:44 PM

Ezra gets it right- the point is that the American system is a combination of public and private while sullivan wants to pretend its only one. In the example of his AIDS drugs given- there is no way that he would have them but for the research that was done at the basic level by the public sector and no way he would have had them but for the involvement of the private. Of my two degrees from undergrad one is in Biology. In that degree I dealt with a lot of people doing a lot of the basic research in HIV research. It was these people who discovered much that was necessary to eventually figure out for example how to address the ability of the virus through mutation to get around treatments. this remains an ongoing issue, and I have no doubt if and when problems are solved with it, it will be because of private AND public efforts.

Posted by: akaison | Jun 29, 2007 9:51:41 PM

Consum,

You didn't mention price controls specifically in your post, so maybe you'd agree with me that this is a case of "Europe sucks" rather than "price controls suck",

No, I do not agree. The report explicitly cites price controls as one of the problems of the European pharmaceutical sector:

In some countries, which rely on administered prices, we find that prices and market shares do not vary substantially after patents expires. In competitive drug markets, price drops are a typical consequence of patent expiration and of entry by generic products, with a significant turnover in terms of market shares. We therefore conclude that there is too little market-based competition in the final markets in some of the European countries.

And:

Systems that rely on free or semi-free prices and on comptition-based mechanisms (USA and, since the exclusion of patented drugs from the reference pricing system in 1996, Germany; UK) do experience a significant degree of competition and mobility of market shares after patent expiry. On the contrary, systems that rely on price fixing (Italy, France) experience a significant degree of stability in firms market shares over time, irrespectively of patent expiry

The report also suggests that price controls contribute to European pharma's higher labor costs:

Price fixing mechanisms tend to protect local firms in domestic markets, allowing for the survival of inframarginal companies in some European countries. These are highly labour intensive companies.

Posted by: JasonR | Jun 29, 2007 10:01:57 PM

by the way- as if in answer to my point about the basic science and HIV- look what just happened:

http://www.edgeboston.com/index.php?ch=health_fitness&sc=health&sc2=news&sc3=&id=21479

One of the big issues with HIV is that even i the viral load is zero it can hide in body so that it can not be reac hed, and yet now the science is moving through the basic level where they are starting to even take the virus out of infected cells. Guess where it is? Not the US.

If any of you non science nerds want to understand this outsdie of an idealogical bent- a lot of the science regarding HIV is applicable to other areas as well because of both the simplicity and yet complicated abilities of the virus. Anyway, check it out- I know its not idealogically bent- but you know- maybe that's the problem with these discussions.

Posted by: akaison | Jun 29, 2007 10:05:12 PM

oh and as we are talking- no the US- I mean Germany at Max Planck Institute for Molecular Cell Biology and Genetics in Dresden. The research is really fascinating for reasons other than HIV which I will not get into out of fear of boring others.

Posted by: akaison | Jun 29, 2007 10:08:12 PM

While we're at it, can someone explain (or provide a link to an explanation of) the mechanism for licensing chemical compounds from the NIH. How does the NIH decide which pharmaceutical company can license what, and how much that company has to pay?

Posted by: Joel | Jun 29, 2007 10:20:36 PM

Joel,

NIH has a tech transfer office that functions very similarly to university tech transfer offices. Payment is negotiated on a case-by-case basis based on presumed value by both parties.

http://ott.od.nih.gov/licensing_royalties/flowchart_licproc.html

Posted by: wisewon | Jun 29, 2007 10:28:01 PM

Joe Blow

Thank you for showing these people a glmpse how a drug is really developed. I can't believe someone as bright as Ezra has fallen back on the old canard of "universities w/ public money" are leading the drug discovery effort. This is the go to line all across the liberal blogosphere and as you have shown is utter nonsense. Next we will see a post about how pharma SGA is 3X R&D expenditures so introducing massive price controls wont really effect new discovery, another canard propagated across the these blogs.

The one thing that Joe Blow leaves out of the list is the time it takes to complete Phase I, II, and III and ultimately launch a new NME or even a "me too". We're talking anywhere from 4-12 years and a bukoo of cash and the odds of getting a true commercial product are something around 10 or 15 to 1. That means a lot of cash is burned on a lot of losers not to mention the tremendous opportunity cost associated with having such huge amounts of money tied up for so long in a process where the outcome is entirely unknown. This is the reason why proprietary pharmaceuticals demand a high rate of return and enjoy higher than average margins. Without the higher than average ROI incentive, nobody in their right find would invest in the development of a new drug, it's way too risky of a business.

This in fact is why we are now seeing a bit of a sea change in how drugs are being developed. Many new drugs are discovered in small biotech and discovery companies - these companies are normally funded by venture capitalists, angel investors and in some cases money from the private market via IPO. In each case, the investors come with very high risk tolerance. However, they seek a higher than normal ROI. Once the Phase I or Phase IIa hurdle is cleared (and a huge risk component is removed), big pharma swoops in to license the compound (or buys the company outright). Big pharma is needed as these small companies don't have the horsepower, in terms of manufacturing capability, access to doctors & patients, or the tremendous cash reserves needed to fund Phase IIB, III and launch, which is substantial and still very risky. Thus, big pharma has removed some of the early stage risk from their portfolios and as a result average margins across the industry are starting to come down and are expected to continue to be squeezed in the next 5-20 years but will most likely be always be higher than average due to the risk component.

The idea of having the NIH develop a drug is ludicrous. Do you have an idea of the controls that need to be in place to manufacture a small molecule drug, not to mention a biopharmaceutical? The sunken plant & infrastructure costs, raw material sourcing, clinical trial management, formulation development, packaging, distribution, etc. The supply chain management alone for a modern pharmaceutical is way beyond the capabilities of any government run organization outside the military (and yo know how efficient that is).

This lefty fascination with intervening in the pharma industry is indeed a recipe for disaster. The idea of tearing down one of the remaining US dominated industries because you think innovative medicines should be somehow be free or price controlled is really incomprehensible to me.

Posted by: JBJB | Jun 29, 2007 10:41:16 PM

The idea that pharma companies are moving from Europe because the retail market for medicines is not as lucrative is just silly. The USA doesn't need pharmaceuticals to be developed and manufactured within its borders in order for a pharma company to charge outrageous prices for it. All that's required is a drug that treats a common problem - or a good marketing campaign that makes a problem common.

If we look back at joe blow's comment about the process involved in developing pharmaceuticals, we see that he actually provides ample evidence to prove Ezra's point about the utter necessity of the NIH to the worldwide pharmaceutical industry. As Ezra has shown many times, pharmaceutical companies create a lot of copycat drugs, either mimicing a competitor's drug or just taking a metabolized form of their present drug, for example, to the FDA and getting a whole new patent for it.

What the data shows is that new classes of drugs are usually first explored by the NIH. Once the critical first phases of drug research are done using taxpayer money, pharmaceutical companies come in, pay a pittance for the work already done and then continue the development of the drug. Yes, what pharma companies do is very difficult and important and it costs money. But they wait for the NIH to determine if a particular class of drug is even worth pursuing before they put any resources to it. It's a sweet deal, really, which is why the pharmaceutical industry is second only to Big Oil in profit margin - that's profit margin, not gross receipts. They simply don't have to waste time and money on research pathways that aren't going to pan out.

Obviously, then, the big draw of the USA is how highly socialized the initial R&D phase is for our pharmaceutical industry. If they relocate here, they get to take advantage not only of the research being done, but they also get to recruit from all the NIH scientists that might be getting tired of making a government salary.

joe blow, wisewon and others want to make the NIH sound like a high school science club that the pharmaceutical companies tolerate and encourage by wasting their money on elementary science. By contrast, Ezra and others like myself have only claimed that the NIH fills a valuable and necessary niche in the drug development process, and does it at cut-rate prices for the industry.

And if this society wanted to, we could in fact have the NIH take over the entire industry. As Consumatopia pointed out, the money coming in from the retail sales of pharmaceuticals would more than cover the increased budget the NIH would need, with the added savings of not having to pay exorbitant CEO salaries or shareholder dividends. It's not the way I think we should go, but it's not impossible either.

Posted by: Stephen | Jun 29, 2007 10:41:41 PM

I agree with your latter statement 100%, and did not come close to insinuating the former. I pointed out that NIH/academics do DIFFERENT steps than pharma, at no point did I demean their activities. They are clearly necessary.

You need to calm down and stop saying childish and untrue things.

Posted by: wisewon | Jun 29, 2007 10:53:18 PM

The report explicitly cites price controls as one of the problems of the European pharmaceutical sector

No, only in SOME European countries--Italy and France. And those problems don't seem to be of the kind that Sullivan is talking about--essentially, the fixed prices are too high. Most of the problems seem to be that prices don't fall enough after patents expire. Which is just as well, as there really isn't as much need for negotiating fixed low prices when competition among suppliers is possible.

Posted by: Consumatopia | Jun 29, 2007 10:54:11 PM

As the wonkosphere's health policy guy, this sentence from Ezra is surprising: "And these points that there's a difference between bringing a drug to market and researching its basic molecular structure are obvious, too."

What do you mean, 'research its basic molecular structure?' Do you mean that Pharma already has a drug of unknown structure and is trying to figure that out? As a health policy wonk, I'm sure that you realize that the ideal (potent, safe, able to be chemically synthesized) drug is UNKNOWN and that initial lead compounds need to be both synthesized and tested. You know what a 'lead' is, right?

Posted by: Klug | Jun 29, 2007 10:54:27 PM

"What the data shows is that new classes of drugs are usually first explored by the NIH."

Stephen, for all of us, please explain what you mean here. What do you mean by "classes of drugs"? Do you mean classes of compounds (beta-lactams, fluoroquinolones, etc.)?

What do you mean by "explored"? Do you mean synthesized? Do you mean assayed or do you mean 'tested on animals/humans'?

Posted by: Klug | Jun 29, 2007 11:00:49 PM

Consum,

No, only in SOME European countries--Italy and France.

No, it cites price controls as a problem, period. It identifies Italy and France as examples of countries that fix their prices, in contrast to Britain and Germany, which rely on "free or semi-free prices and on competition-based mechanisms" like the U.S.

Posted by: JasonR | Jun 29, 2007 11:11:36 PM

Has anyone here, or Andrew Sullivan, denied that the NIH plays an important role in the basic science of pharmaceutical drugs, or advocated getting rid of the NIH, or even just advocated cutting its funding significantly?

If not, I'm not sure what Stephen is going on about.

Posted by: JasonR | Jun 29, 2007 11:14:56 PM

I thought Ezra was referring to the basic science versus the parts that are eventually pharma rather than the process of taking a drug from research to development including clinical trials. Am I not getting the points here?

Others seem to have diversged markedly from Ezra's point.

This is what I thought he meant by the following:

"Yes, bringing to market involves science, and trials, and various other important, complex, and even worthwhile tasks.

But that's now (assumed this meant 'not' rather than 'now') what Andrew's talking about here, is it? "America is the last refuge for pharmaceutical innovation (meaning no public innovation involved). And the left wants to kill that off. (Meaning if public innovation is involved it will kill the private innovation)" I don't think what he means is that government funded research labs are the last refuge for pharmaceutical innovation (meaning no link between public and private, but rather Sullivan owes his survival with AIDS drugs soley to the private innovation). And nor do any of you. If you want to have a more subtle discussion of pharmaceutical policy, we can, but that's not the point of this post. The point is that Sullivan really, really, really doesn't know what he's talking about. It's straight folly to attribute all drug development in this country to the Magic of Capitalism (again meaning at bottom that Sullivan ignores how public is linked to private). And yes it's done, all the time, over and over again. (meaning this is the norm of public and private and not as Sullivan posits)"

In other words, he was responding to his view that Sullivan is taking a simplistic view that somehow in America that innovation is private. That this view is false. That a sutble view of the situation is that it's a combination of both, but that's not what Sullivan wrote. If I am mistaken, please let me know.

Posted by: akaison | Jun 29, 2007 11:29:41 PM

Having read sullivan for a year or more- yes, if not here, in general he does seem to be challenged to present a balanced view of facts. Ie, another example as mentioned here previously was his presentation that gay civil rights is a conservative value. He twists and contorts the facts to make his version of conservatism (a none American version) match what he believes American conservatism to be. He drools over Burke and others, but never seems to connect that he's not talking about American conservatism in the modern sense- you can see this in his book The Conservative Soul.

Extending this to his argument here- its consistent with how he constructs arguments. He also does this with the left very frequently constructing strawmen versions of the left that bare little resemblance to the American left (or I should say progressive/liberal since there isn't an American left to speak of in the U.S.)

Posted by: akaison | Jun 29, 2007 11:34:17 PM

By the way- one of the ways he does this is he talks often of the modern conservatives being Christianists, and himself being a Christian with ideals of doubt, but that he believes in limited govt based on Burke's ideas. Someone recently gave example of how he contorts facts with his belief system in another way. He's against abortion so he finds a poll that believes shows Americans are increasingly in support of Gay rights, but in the same poll says they are uncomfortable with abortion- or something like that. Here's a link to a discussion of the cortion at work:

http://www.talkleft.com/story/2007/6/27/175050/632

Posted by: akaison | Jun 29, 2007 11:38:00 PM

Akaison,

The pharmaceutical industry was damn innovative, to be sure, but not in the development of this drug -- only in the selling of it.

This was the end of the post-- which isn't really in line with the combination of public/private (i.e. "ONLY in the selling of it")-- but more in the vain of "NIH does the science and pharma just markets it." That what that line pretty much says. Combine that with some incorrect uses of the term "develop" which further confused whether Ezra thought the role of NIH to be broader than research-- that was the issue I had with the post.

Ezra later clarified along the lines you suggest. I'd suggest Ezra's eagerness to counter Sullivan's claim led him to slant his initial post a little too simplistically against pharma.

Posted by: wisewon | Jun 29, 2007 11:38:13 PM

By the way, I can't get Ezra's link for his statement "One survey found that taxpayer-funded research developed 15 of the 21 most important drugs introduced between 1965 and 1992" to work. It goes to a page that says the rxpolicy.com domain is for sale.

Posted by: JasonR | Jun 29, 2007 11:55:10 PM

Perhaps you are right, but I understood him to be talking about the right's fetishism with the markets. That even when it is patently (no pun intended) clear that markets are inappropriate they will argue market anyhow. Basic science where there is no readily apparently application for a decade or so is one of those areas where one quickly realizes that the markets are not always the sollutions. Indeed, one of many reasons why I've become more liberal as I've gotten older is that I have recognized that what i understood as a kid- the simple construction and comfort that say the right (and if we had one in this country- the left) provides doesn't approach reality. For most things with regard to market versus public- the real answer- at least for me- is to say- it depends. The right would never say it depends. They never met a situation regardless of other competing issues that they didn't think couldn't be solved through the market. Healtcare (always Ezra's larger point) is one of them. I've never read Ezra to say that the mechisms of economics aren't applicable, but that there are other things that are of equal concern such as quality (which anyone who has ever taken antitrust law can tell you isn't the same as price or profit) or fairness etc. I have the feeling JasonR never considers anything (based on his denial in other conversations) is ever based on anything more than what he considers the "market" That word market of course seems to be so lose a definition as to not be meaningful other than as a idealogical perspective. That's why as people waste time with their back and forth with him- I don't see the point. He's going to deny anything that doesn't conform to market fundamentalism anyway. So what's the point? The same I feel is true of Sullivan in other ways. He refashions all of his beliefs as conservative facts be damned. I mean his stuff on gay rights is just bizzare to anyone like me who has read a lot of gay history. It wasn't the conservatives who lead the gay rights struggle, although conservatives like Sullivan are perfectly willing to eat the fruits fo the gay liberals labor. Anyway, that's off topic, but illustrates the point of what i think Ezra was referring- the contortion of facts. He may have did it in an unclear way- but I think his clarification more than makes up for that.

Posted by: akaison | Jun 30, 2007 12:00:15 AM

It identifies Italy and France as examples of countries that fix their prices, in contrast to Britain and Germany, which rely on "free or semi-free prices and on competition-based mechanisms" like the U.S.

Those countries have three completely different systems for paying for medication and cannot be grouped together. I believe the UK in particular has the National Health Service buying all the drugs according to the Pharmaceutical Price Regulation Scheme.

Posted by: Consumatopia | Jun 30, 2007 12:11:33 AM

See the first two comments in the thread.

Posted by: Sanpete | Jun 30, 2007 12:21:55 AM

Apparently, whenever Ezra posts an alarm goes off at PHRMA and they send a few of the scientists and patent lawyers they have on the payroll over here.

To reiterate what one poster above stated, big pharma is moving away from drug discovery and development altogether. Whether through outsourcing (drug discovery) or acquisition (bio-techs involved with drug development), pharma is increasing relying on other players for the early phases and concentrating on the clinical trials and post-trial operations. Interestingly, there is some push to have academic labs take their work farther down the path toward developing therapeutics as well in an attempt to lessen the "innovation gap."

If the NIH would have held out for more than .5% of royalties they might actually be able to fund some people today.

Posted by: Burnham | Jun 30, 2007 7:25:00 AM

Reading this thread has been like what happens when I'm the driver- we take the scenic route. And what scenes we have seen!

I especially like the bit about how the drug companies have to consult closely with doctors about local patient likes and dislikes to develop a drug that is relevant to the human condition- a condition that we now know, thanks to the patient unraveling of the genetic code, is almost universally alike around the globe.

That's getting pretty far from healthcare or wellness already, and pretty close to the woman in furs I saw in the doctor's office in July, arguing in the waiting room that she wasn't getting enough tranquilizers, a proposition with which her audience could only concur.

Even more charming is the idea that drug companies are moving here because they can do better research. Right, the fact that they can control the FDA and charge whatever they like for their drugs has nothing to do with it.

And who knows, maybe if Sullivan had been one of the 50 million Americans who can't afford to buy drugs, maybe (presumably in Heaven) he would have a little more understanding and support for a national scheme to provide the drugs.

The amount of pure crapola being dished out on this issue is pretty well illustrated by the number of problems that we now know can be alleviated by plain old marijuana, the kind that can be grown by any halfway competent gardener and smoked in a bong made from a toilet paper tube and some tinfoil. This, as it happens, really is a case where the patients led in demanding relief, and doctors have tried to help them when they could.

But the drug companies have fought medical marijuana bitterly, because it cuts right to the quick where it really matters to them- their profits.

And that's the real bottom line here.

Posted by: serial catowner | Jun 30, 2007 8:53:15 AM

> Even more charming is the idea that drug
> companies are moving here because they can
> do better research. Right, the fact that
> they can control the FDA and charge whatever
> they like for their drugs has nothing to do with it.

Especially since during the 1990s the very same drug companies were all busy moving their "reseach headquarters" (meaning 3 guys with filing cabinets and a fax machine) to Ireland to take advantage of the incredibly generous tax laws on patent portfolios available in that country at the time.

Cranky

Posted by: Cranky Observer | Jun 30, 2007 10:20:15 AM

Cranky

You couldn't be more wrong. Pharma companies have moved very little of their R&D operations to Ireland. Many did however invest in manufacturing facilities in Ireland (BMS, Pfizer to name a few). This was of course due to the favorable tax treatment on the infrastructure investment. Similar activity has taken place in Puerto Rico. Recently, Singapore is the most likely spot for a new plant investment due to favorable treatment of investment and strategic geographical location.

Notice that companies no longer build in the Peoples Republic of New Jersery, for obvios reasons.

Posted by: JBJB | Jun 30, 2007 10:47:08 AM

JBJB,

Just wanted to echo the manufacturing versus R&D operations in Ireland.

A number of people on this thread, both on the right and left have talked about the favorable regulatory treatment in US vs. Europe. Its actually the other way around. EMEA (the European FDA) has traditionally been much more "industry friendly" about what is required for drug approval-- with the one exception being that they require comparison to existing treatments.

The poor pharma environment in Europe is due to drug pricing, as I mentioned above, not the regulatory environment for approval.

Posted by: wisewon | Jun 30, 2007 11:08:13 AM

Just pure ignorance. Beyond the fact that your genetic comment implying that humans are "almost universally alike" is completely wrong, particularly given environmental factors in disease (look at types of cancer incidence across countries, for example), that wasn't the point. Medicine is practiced differently in different countries, so data that is compelling to you, won't necessarily be compelling to a doctor who learned medicine in Eastern Europe. When you are doing a clinical trial figuring out what data to collect, that different is extremely important. Additionally, there are a lot of other different considerations, e.g. mode of administration (pill vs. IV vs. inhaler vs. patch, etc.) dosing frequency (different patients may be willing to take three times a day versus once a day, which leads to different development paths). Hence, my initial post, you need interaction between practicing physicians and your R&D team in order to develop the best drug. Hence, my initial post-- being close to your most important market, the U.S., has been the main driver of the Europe to US migration in R&D operations.

Posted by: wisewon | Jun 30, 2007 11:20:06 AM

> You couldn't be more wrong. Pharma companies
> have moved very little of their R&D operations to
> Ireland.

Actually, if you read my post carefully I couldn't be more right. What they did was create "independent subsidiaries" incorporated in Ireland, "sold" their patent portfolios to these "independent" entities, then "rented" the patents back - and took an expense deduction at the actual lab end for "rental" expenses and very generous credits and low rates at the Irish end. It was quite the business in the 1996-2002 timeframe.

Cranky

Posted by: Cranky Observer | Jun 30, 2007 12:13:41 PM

Cranky,

I thought you may had been suggesting this. Very familiar with the practice generally speaking, hadn't heard that Ireland was the location of choice.

Any chance you have come across something on the internet to this effect? I'd be curious...

Posted by: wisewon | Jun 30, 2007 12:24:22 PM

The Taxol case that Ezra refers to at the end of his post is widely held up as a time where Big Pharma (BMS) took NIH for a ride. That might actually be true; Robert Holton of FSU is widely held up to be the one that made a key breakthrough in the semisynthesis of paclitaxel. Doubtless, he was NIH-funded. Taxol's a great story and NIH-funded scientists told most of it.

But NIH being taken by pharma once in the late 80's was enough to ensure that early-stage drug developers hold out for the big check now when negotiating.

Posted by: Klug | Jun 30, 2007 12:28:26 PM

One thing that's coming across as I read these posts (many of them interesting) is that the right's fetishism with the "market" to me is as per usual being shown to be a false black/white construct. I don't want people to get away from that point because I believe it to be Ezra's central thrust against Sullivan. That he's created a fetish of the "market" such that he can not have any of the discussion that is occuring here. The question is why? Why can not this complexity exist in their arguments?

Posted by: akaison | Jun 30, 2007 12:58:12 PM

By the way, I think I know the answer as I explain above when it comes to Sullivan. To me, he is never more telling than when he talks about being a gay man. Maybe because I personally know a lot about this just because I've read so much more on it, but I am able to cut through his bullshit and realize how selective in his presentation he is being. His selectivity seems entirely based on what affects Sullivan rather than any overarching attempt to understand what's occuring.

Posted by: akaison | Jun 30, 2007 1:01:49 PM

But NIH being taken by pharma once in the late 80's was enough to ensure that early-stage drug developers hold out for the big check now when negotiating.

But the NIH still doesn't do this, since what they collect from their research is defined by law. There is no negotiating.

Posted by: Stephen | Jun 30, 2007 1:51:01 PM

The point is that Sullivan really, really, really doesn't know what he's talking about.

Yep. I lived with research chemists at university, and got a good sense of the work they did -- and its relationship to private-sector research -- through osmosis. My guess is that Sullivan really doesn't know much about research chemistry.

Posted by: pseudonymous in nc | Jun 30, 2007 3:00:40 PM

But is it that he doesn't know or doesn't want to know? Willful ignorance is not the same thing as ignorance. This is my bone of contention with many on the progressive side of the aisle in the US. Do you really think they , the right, couldn't learn the facts or undrestand the nuiance of your positions if they wanted to know them? Or are they better served by denial? Willful ignorance isn't something we should be trying to change because it is willful. Until you admit you arguing , generally speaking, with people who don't much care what the facts are or the nuiance of your position is, you will continue to spin in circles trying to debate them.

Posted by: akaison | Jun 30, 2007 3:28:07 PM

Akaison, the general rule, according to the accounts I read here, is that conservatives don't want to know the truth, while liberals do. Conservatives are also rather dumb and immoral, while liberals are smart and only occasionally give in to minor temptations, against their basically moral natures. That's why conservatives are conservative and liberals are liberal.

It's really pointless to talk to either conservatives or liberals, because the former won't learn from reality, and the latter already know reality.

Posted by: Sanpete | Jun 30, 2007 3:46:47 PM

Andrew's post says Europe's lagging behind in research and innovation. Ezra's response seem to indicate innovation over here isn't all its cracked up to be. My question is: how do we compare in terms of innovation to Europe?

I caught a post a while back on Marginal Revolution indicating more new drugs are introduced here, but I'd love some clarification.

Posted by: DM | Jun 30, 2007 4:17:45 PM

Sanpete you can talk ad nauseum and I am simply going to for the most part unless I slip up ignore. There is nothing that you add to a conversation. Good luck.

Posted by: akaison | Jun 30, 2007 5:18:29 PM

Stephen, do you mean the work product of the NIH or do you mean the work product of NIH-funded university professors?

"My guess is that Sullivan really doesn't know much about research chemistry."

My guess is that neither do most of the commenters here.

Posted by: Klug | Jun 30, 2007 5:27:21 PM

Klug,

What do you mean by guess? Do you mean hunch? Do you mean estimate? And you should really clarify most. Do you mean a simple majority, 2/3, everyone but you?

Posted by: Jack | Jun 30, 2007 5:53:58 PM

I have a degree in biology- specifically virology and genetics related - it's not chemistry, but it's not so different that you can try to claim that the approach for taking applications from the university to the private sector are going to be miles away either.

Posted by: akaison | Jun 30, 2007 6:49:54 PM

sorry that should have said with an interest in virology and genetics rather than making it sound like my degree was in that area- i have a general biology degree

Posted by: akaison | Jun 30, 2007 6:52:26 PM

Wow. Lots of sniping.

I will say that as a reasearch chemist turned patent lawyer, some of Ezra's phrasing in the original post makes him sound pretty clueless about the actual practice of pharma R&D. However, his criticism of Sullivan's argument that the relative success of the US pharmaceutical industry as being due to "free markets" is spot-on. Gov't funded basic research is like gasoline being poured on the fire of innovation.

One pharma IP-related topic that I wish would be discussed more by health-care wonkosphere types is pharmaceutical patent term length. In 1984, as part of the Hatch-Waxman Act, congress created a patent term extension provision by which terms of patents covering drugs and medical devices are extended by a period equal to the time spent under pre-market regulatory review. This was supposed to compensate for patent term loss while drugs were undergoing clinical trials, as well as offset a complementary infringement exenption allowing generics to perform bioequivalence studies on drugs while they are still on-patent so that they can launch the generic immediately after patent expiration. However, these provisions, along with some speeding-up of how companies run clinical trials and improvements in application pendency times at the FDA, have had the net effect of extending effective market exclusivity for patented drugs from approximately 7 years (in 1983) to the current average of 12-14 years.

This is almost a doubling of effective patent term. Predictably, the overall profitability of the pharma industry has increased substantially since the 80s, and there is economic scholarship establishing the causal link to Hatch-Waxman.

I suspect, although I don't have enough of a background in economics to prove why, is that a second-order effect of patent term extension is that longer patent terms favor investment in so-called me-too*** drugs. The reason for this is that there is a longer period available for patented drug vs. patented drug competition. The literature I have read states that even when patented competition exists it has relatively minor effects on prices, allowing me-too drugs arriving years after the first-in-class drug to reap large marginal profits, even if the me-too drug commands a smaller market share than the first-in-class or best-in-class drugs. However, as patent term decreases, there is an earlier onset of competition between me-too drugs and the generic of the first-in-class compound, which does have a large impact on pricing of the me-too drug. Since first-in-class or best-in-class drugs are still able to earn large profits with a short patent term, decreasing overall patent term may be a policy lever that can be used to drive R&D towards unmet medical need (in addition to allowing consumers earlier access to generics).

Of course, decreasing patent term would be predicted to drive the overall level of innovation down. However, there are other ways to drive innovation, such as increased goventment-funded basic research, tax-policy, etc that might allow the overall level of useful innovation to be maintained.

*** - I think that the phrase "me-too drug" is misused by many industry critics. I mean only to refer to additional drugs in therapeutic classes where the medical need is already well-met, and the "me-too" drug offers no substantial improvement in safety, efficacy, or convenience of use.

Posted by: Mike S. | Jun 30, 2007 7:02:59 PM

Mike,

There are already tax incentives for R&E . What other policies are you referring to??

Posted by: akaison | Jun 30, 2007 7:22:06 PM

If anyone really wants to learn about the drug development process, check out Derek Lowe's blog - In the Pipeline:

http://www.corante.com/pipeline/

He maintains one of the best blogs I've seen on the topic and he is an actual medicinal chemist working in the industry. I believe he is on a bit of a hiatus but should be back to regular blogging soon.

Posted by: JBJB | Jun 30, 2007 7:48:28 PM

Yes, there are a lot of differences between people, especially those caused by environment. This should be pretty obvious from the US having very high rates of drug abuse in spite of heroically claiming to be against it all the time.

But the basic idea of a successful drug is that it doesn't matter what religion the patient is, or what kind of clothing they are wearing. You give aspirin for a fever and the fever goes down. Aspirin is a very important anti-pyretic because it works so well at reducing fever, and less important treating headaches because it is less reliable in reducing the pain of a headache.

One point "wiseone" is glossing over is that the drug companies aren't consulting doctors about what drugs are needed, they're bribing them. "Hey, we are really interested in your viewpoint, why don't you come to a resort this weekend and share it with us," or, "Come to a seminar and we'll pay you a thousand dollars to give a short talk".

This is how we end up with several versions of Viagra, arguably the last drug that the world needed to see invented.

Face it- rich people already stay fat and flossy long after the pull-date for poor people. The fact that the drug industry focuses on making the lives of the rich even better is a bug, not a feature.

Posted by: serial catowner | Jun 30, 2007 7:53:26 PM

My question is: how do we compare in terms of innovation to Europe?

According to the European Commission report mentioned by both Sullivan and Ezra, the U.S. pharmaceutical sector is far more innovative and a far larger source of new and improved drugs than the European pharmaceutical sector. I think this is Sullivan's basic point, and it seems entirely correct. All this business about the NIH is just a distraction. As far as I know, Sullivan does not advocate eliminating the NIH or cutting its funding, and does not deny the hugely important role it plays in the basic scientific research that underlies the creation of new drugs.

Posted by: JasonR | Jun 30, 2007 7:56:43 PM

Jack: I do indeed like questions. Most means >50% of the commenters. The only person on your 'side' of this debate that seems to have a point is Burnham, although I disagree. Interestingly, I suspect Burnham is you, Jack.

I think I've developed a new version of Godwin's Law. I'll call it Klug's corollary: As an online discussion of pharmaceuticals grows longer, the probability of the mention of Viagra or ED drugs approaches one.

There are not 'several' ED drugs; there are 3. Viagra was intended as a blood pressure medication when they found its unusual side effects. No matter what you think of Pfizer's marketing practices (and I don't think they're great), there is no doubt that ED is a real condition. Levitra was a genuine 'me-too' although Bayer claims it's better than V. Cialis appears to me to be a better drug than V.

Posted by: Klug | Jun 30, 2007 8:44:43 PM

Stephen, do you mean the work product of the NIH or do you mean the work product of NIH-funded university professors?

Gee, I suppose this and the other pedantic question you asked me earlier means you're "in the industry." Perhaps you have a Ph.D, or an MD, or maybe some very impressive combination of degrees.

What you're doing here is similar to people in my field expounding at length upon the original Hebrew or Greek or making sure that everyone understands the "real" definition of existentialism (hint: it's not what most people think).

But no one cares. So there's 20 classifications of drugs, with therapeutic classes as well, with a single drug able to occupy slots in several of those based upon new information. Oh, gee, you caught me, I didn't use "class" in the absolutely technical way. But my point stands, that the majority of the initial work on new types (or did I just make another horrible mistake?) of drugs has been coming out of the NIH.

Oh, but NIH-funded or the NIH? What a great question. If you really don't know, then I would guess you don't do much grant writing, or perhaps you don't get the grants you want. Work done on an NIH grant is going to be different, and governed differently, than work done in-house. Durrrrrrr.

It's amazing the level of, for lack of a more descriptive term, c**k-swinging that always occurs in threads about medicine. One of the more interesting shifts in American culture is how we're not worshipping at the altar of the MD nearly as much as we used to, and I think that bothers the hell out of people in the medical profession. For me, I've just met too many total idiots who managed to complete the requirements for an advanced degree, whether it's an MD, DO, Ph.D in a medical or any other field. Just because someone knows how to do research on pharmaceuticals doesn't mean that person also will know the best way to fund the industry, or the correct amount of regulation for it.

In fact, I would imagine that the pharmaceutical companies themselves put the medical people in the medical jobs and let lawyers, accountants and other "lesser" types handle the legal and financial side of the business. Frankly, a research chemist, for example, is quite likely the last person I would go to for solid information on the best business and regulatory environment for the pharmaceutical industry.

Posted by: Stephen | Jul 1, 2007 12:32:00 AM

Stephen:

Your initial statement strikes me as, well, unfounded in truth. IMHO, that whole paragraph indicates a lack of knowledge about the drug discovery process. I'll leave your weird, personal comments alone. I suggest looking again at Joe Blow's jewel of a comment or reading Derek Lowe's blog.

Look at the weasel words in your newest statement: "that the majority of the initial work on new types of drugs has been coming out of the NIH." Even the words "work" and "coming out" are confusing. What do you mean? Do you mean that scientists at NIH initially discovered/published the relevant enzyme target? Do you mean that NIH first synthesized that particular class of compounds? It's these vague and incorrect assertions that drive people around "the industry" crazy. "Hey, you basically robbed that other guy to get where you are" is a good way to get people riled up.

Look, I think the NIH is frickin' great. Personally, I think its funding should be doubled every 3 years. But in the public mind, it doesn't get credit for the things it does well (fund and help direct the academic biomedical research complex) and it gets too much credit for things that it doesn't do a lot of (compared to outside the NIH), like medicinal chemistry.

Posted by: Klug | Jul 1, 2007 1:19:18 AM

To follow up on Taxol (which is a remarkable science story), try the following articles. The first is a wonderful summary of the science and personalities behind it (although likely biased towards Holton). It's worth noting that while NIH received 0.5% of royalties of Taxol's sales, Holton/FSU received 4.2%. The synthetic chemists always get paid.

http://www.rinr.fsu.edu/fall2002/taxol.html
http://pubs.acs.org/cen/coverstory/8137/8137taxol.html

Posted by: Klug | Jul 1, 2007 1:48:30 AM

I haven't been up to much these days. Such is life. I've just been letting everything happen without me these days, but I don't care.

Posted by: candy cotton perfume | Aug 13, 2007 4:55:29 PM

We are killing the rainforest

Posted by: ford detroit locker | Aug 22, 2007 12:34:40 PM

Help the homeless down the street and persuade them to look for work

Posted by: antique auto glass | Aug 26, 2007 8:03:11 AM

An integrated, segregated society is better

Posted by: dealer discount tire | Aug 27, 2007 1:24:07 AM

I just don't have much to say right now, but I guess it doesn't bother me. Basically nothing seems worth thinking about. Nothing notable happening these days. Shrug. Not that it matters. My mind is like a void. I've basically been doing nothing , not that it matters. More or less nothing going on. I guess it doesn't bother me. Not much on my mind.

Posted by: again delivery florist flower from | Aug 27, 2007 4:16:33 PM

I haven't gotten anything done lately. Not much on my mind recently. I just don't have much to say right now. My mind is like an empty room.

Posted by: agency airline international ticket travel | Aug 30, 2007 12:24:41 PM

Agree with a flat tax system

Posted by: disk2 | Sep 4, 2007 4:15:14 PM

Vanity is not a valid reason for cosmetic plastic surgery

Posted by: free live cams girls | Sep 22, 2007 1:01:28 PM

We are better off today than we were eight years ago

Posted by: Jeniffer | Oct 2, 2007 2:06:09 PM

托盘
 托盘
 钢托盘
 钢制托盘
 塑料托盘
 木托盘
 木制托盘
 纸托盘
 木塑托盘